1. Introduction: Why the Leasehold Reform Matters

The government’s 2026 leasehold reform is set to transform homeownership for millions across England and Wales. With ground rents now capped at £250 per year and set to fall to a peppercorn after 40 years, many leaseholders are celebrating. But beneath the headlines, confusion remains about who benefits, what charges are covered, and where costly mistakes can still be made. This article clears up the biggest misconceptions and helps you understand the real impact on your property bills.

2. Myth-Busting: Common Misconceptions

Let’s tackle the most widespread myths:

• “All my property charges are capped.” Only ground rent is capped at £250; service charges and estate management fees are not.

• “Freehold means no extra fees.” Many new-build freeholds still pay uncapped estate management fees.

• “Service charges are capped too.” Service charges remain uncapped, but you can challenge them if they’re unreasonable.

• “My flat will be cheaper to run.” Ground rent savings are real, but service charges may still be high.

Understanding these points can save you from expensive surprises and disappointment.

3. What’s the Difference? Ground Rent vs. Estate Management Fees

It’s easy to mix up ground rent and estate management fees, but they’re very different:

• Ground Rent:
  A historic payment to the freeholder for the right to occupy the land. You get nothing in return except the right to stay. The new law caps this at £250 per year, with a further reduction after 40 years.

• Estate Management Fees (Service Charges):
  These pay for actual services—gardening, cleaning, repairs, insurance, and more. They are not capped and can fluctuate with costs. Residents can challenge unfair charges at a tribunal, but there’s no automatic limit.

4. Who Benefits Most? Impact by Property Type

The reforms don’t affect everyone equally. Here’s how different homeowners are impacted:

• Leasehold Flats:
  Big winners. Most flats are leasehold, and the ground rent cap means real savings and easier sales. Service charges, however, remain the main financial burden.

• New “Fleecehold” Houses:
  No benefit from the ground rent cap. These freehold homes still pay estate management fees, which can rise and are not capped.

• Traditional Freehold Houses:
  Largely unaffected. No ground rent, no estate management fees, just Council Tax and private maintenance.

5. The Risks: Will Freeholders Shift Costs Elsewhere?

A key warning from the reforms is that while ground rent is now capped, some freeholders may try to recover lost income by increasing estate management or service charges. These fees are linked to the actual costs of maintenance, but there’s a risk of “creative accounting” or inflated charges. Leaseholders should be vigilant, check their annual statements, and challenge anything that seems unreasonable. The government’s reforms include more transparency, but the onus is still on homeowners to keep an eye on their bills.

6. Commonhold: The Alternative to Leasehold

The 2026 reforms also make it easier for flat owners to convert to “commonhold.” Under commonhold, residents jointly own the building and land, removing the freeholder and ground rent entirely. This model gives homeowners more control over their property and how it’s managed. However, switching to commonhold requires a majority of residents to agree, and not all mortgage lenders are fully on board yet. Still, it’s a promising option for those seeking long-term security and transparency.

7. Practical Tips: Protect Yourself from Unfair Charges

• Check your lease or title: Know exactly what you’re liable for—ground rent, service charges, or both.

• Scrutinise your bills: Look for unexplained increases or vague descriptions.

• Challenge unreasonable charges: Use the tribunal system if you believe fees are unfair or not properly accounted for.

• Ask about commonhold: If you’re in a block of flats, discuss with neighbours whether converting to commonhold could benefit you.

• When buying: Always ask about both ground rent and estate management fees before you commit.

Disclaimer: This article is general information and does not constitute as legal, medical, financial or tax advice.